Appendix — Skaines v. Uniroyal, Inc.

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APPENDIX “1”

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

J. WYATT SKAINES, individually and d/b/a

WYATT TIRE DISTRIBUTORS ....... Plaintiff-Appellee

Vv.

UNIROYAL, INC., formerly UNITED

STATES RUBBER COMPANY ..... Defendant- Appellant

AMENDED ORDER

(Filed January 22, 1982) John Hehman, Clerk

BEFORE: Epwarps and Martin, Circuit Judges and

Ferkens, District Judge*

Uniroyal, Inc. (“Uniroyal”), defendant below, appeals

from a jury verdict of $223,319 for price discrimination in

violation of §2(a) of the Robinson-Patman Act, 15 U.S.C.

§13(a). This verdict was trebled pursuant to §4 of the

Clayton Act, 15 U.S.C. $15, and with the award of attorneys’

fees in the amount of $106,250, the total recovery of Skaines,

plaintiff below, was equal to $776,207; judgment was

entered thereon by the United States District Court for the

Western District of Tennessee.

On June 24, 1968, Skaines entered into a “Peerless

Distributor Franchise Agreement” with Uniroyal concomi-

*The Honorable John Feikens, Chief Judge, United States District

Court for the Eastern District of Michigan, sitting by designation.

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tantly with a book balance plan.* Prior to entering the

agreement with Uniroyal, Skaines drew up a worksheet

with three sales representatives of the tire company to

project expenses and profits for the business for the year

between July 1, 1968 eed June 30, 1969. The “Financial and

Operating Budget” anticipated a total annual income before

taxes for the first year of $22,456.

The venture did not succeed and this lawsuit ensued

in which Skaines claimed price discrimination by Uniroyal

as a cause. He claimed tires were being sold by Uniroyal to

him at a higher price than to United Tire & Rubber Com-

pany (“United”), another tire distributor in Memphis.

Upon trial the jury concluded that the tires that were sup-

plied to United were of like grade and quality as those

supplied to Skaines, albeit they were sold in some instances

under different labels, and found price discrimination. A

verdict was returned for Skaines.

Uniroyal moved for judgment notwithstanding the

verdict, or in the alternative for a new trial. The standards

for review of the motions are similar but not identical. To

determine if a judgment notwithstanding the verdict is

proper, the evidence must be v swed in the light most

favorable to the party that secured the jury verdict and

reasonable minds must not differ as to the conclusions to

be drawn from the evidence. Woodruff v. Tomlin, 616 F.2d

924, 934 (6th Cir.), cert. denied, 449 U.S. 888 (1980); Gilham

v. Admiral Corp., 523 F.2d 102, 109 (6th Cir. 1975), cert.

denied, 424 U.S. 913 (1976). In this case, there was sufficient

question as to whether the tires were of like grade and

quality to require a determination by a trier of fact. The

*Under this plan, Skaines was to contribute $10,000 to the

venture and Uniroyal supplied a tire inventory.

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decision of the District Court denying Appellant’s motion

for judgment notwithstanding the verdict is affirmed.

On appeal, the reviewing court must only reverse the

District Court’s denial of a new trial if it appears that that

court abused its discretion. Duncan v. Duncan, 377 F.2d 49

(6th Cir. 1967). In this instance, the District Court con-

cluded that there was overwhelming evidence from which

a jury could conclude that there had been a violation of the

Robinson-Patman Act, even though it was of very short

duration. Since the District Court had the benefit of hear-

ing testimony that was presented in this case, as did the

jury, we are not inclined to overturn its ruling that the

verdict was not against the great weight of the evidence.

Nor do we find error in the jury instructions pertaining to

the element of “like kind and quality.” The decision of the

District Court denying Appellant’s motions for a new trial

on these issues is affirmed.

Having found liability for a violation under §2(a) of

the Robinson-Patman Act, we turn to the question of dam-

ages. The jury awarded Skaines, in special verdicts,

$1,150 for diverted sales, $16,969 in price differentials, and

$205,200 in lost future profits. Appellant contends that the

recent United States Supreme Court decision, J. Truett

Payne Co., Inc. v. Chrysler Motors Corp., 49 U.S.L.W. 4516

(May 18, 1981), limits a plaintiff's recovery to actual dam-

ages. We do not agree. The Payne decision states that

damages are not presumed to result from a Robinson-Pat-

man violation and, thus, “automatic” damages are not

recoverable. It further holds that damage to a business is

not, in and of itself, proof of a violation of §2(a) of the

Robinson-Patman Act. We interpret Payne to mean that

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proof of injury must be submitted from which, under

proper instructions, a jury may find damage. Such an

award may perhaps not be in the actual dollar amount of

damage suffered, but because it is based on proof of injury

and has been specifically found to be damage by the jury,

cannot be characterized as automatic. A jury verdict so

based is consonant with Payne. In so holding, the court in

Payne relied on cases in which future profits were awarded

as the result of Sherman Act violations and looked to the

evidence presented by Payne in support of his claim of

future profits.

The concept of recovery for lost profits is not without

precedent. The statute that provides for recovery of treble

damages does not distinguish between Sherman Act viola-

tions and Robinson-Patman Act violations. 15 U.S.C. $15,

Clayton Act §4. An individual who is forced to close his

business may recover lost future profits if he can show that

the defendant’s antitrust violation was the reason that the

business was damaged. Malcolm v. Marathon Oil Co., 642

F.2d 845, 862 n.28 (5th Cir. 1981); Lehrman v. Gulf Oil

Corp., 464 F.2d 26, 45-47 (5th Cir.), cert. denied, 409 U.S.

1077 (1972); Farmington Dowell Products Co. v. Forster

Mfg. Co., 421 F.2d 61, 81 (ist Cir. 1970). However, while

the amount of damages is not subject to a rigorous degree

of proof, Payne, supra, at 4519; Zenith Radio Corp. v. Hazel-

tine Research, 395 U.S. 100, 123-24 (1969); Bigelow v. RKO

Radio Pictures, Inc., 327 U.S. 251 (1946); Story Parchment

Co. v. Patterson Parchment Paper Co., 282 U.S. 555, 561-66

(1931), a plaintiff camnot be awarded damages that are

purely conjectural and speculative. Bigelow, supra, at 264;

Lehrman, supra, at 46. The problem that we face in this

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case is similar to that faced by the courts in Farmington

Dowel, supra, at 81, Lehrman, supra, at 45, and Hanson v.

Pittsburg Plate Glass Industries, Inc., 482 F.2d 220, 227

(5th Cir. 1973), cert. denied, 414 U.S. 1136 (1974). In all

instances, the jury was asked to speculate on the length

of time that a plaintiff would have had a thriving business

in the absence of the antitrust violation when the evidence

only showed that the plaintiff lost money during the entire

time of his venture. 1.) the case before us, we are of the

opinion that the amount of the jury award is not sufficient-

ly supported by the evidence. The only data presented by

Skaines in support of his claim for future profits is that

contained in the Financial and Operating Budget for the

year 1968-69 and his statement that he expected to stay in

business until he retired 25 years later at the age of 65.

The fact that Skaines contended that the business realized

sales greater than $25,000 for the first year of business in

the face of income tax returns that showed a net loss for

the two fiscal years that he was in business does not help

his position. Although we do not substitute our judgment

for that of the jury, the paucity of the evidence to support

such a large verdict is apparent. For these reasons, we

remand to the District Court for entry of an order of

remittitur. Unless Appellee agrees to remit $525,600 within

thirty days of the entry of the order, the District Court

should grant a new trial limited to the issue of damages.

This finding means that the Appellee is awarded in specific

damage for diverted sales $1,150; in specific damage for

price differentials $16,969; and in specific damage for lost

future profits $30,000 — all totalling $48,119. When the

damages are trebled, Skaines will be entitled to receive

$144,357 in damages and $106,250 attorneys’ fees.

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Accordingly, the decision of the District Court

affirmed in part and reversed and remanded in part

actions consistent with the decision of this court

damages.

ENTERED BY ORDER OF THE COURT.

/s/ John A. Hehman, Clerk

is

for

on

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APPENDIX “2”

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEF

WESTERN DIVISION

J. WYATT SKAINES, d/b/a

WYATT TIRE DISTRIBUTORS ............... Plaintiff

vs. No. C-72-216

UNIROYAL, INC., formerly

UNITED STATES RUBBER CO. ............. Defendant

ORDER AWARDING ATTORNEYS’ FEES, STATUTORY

DAMAGES, AND JUDGMENT ON THE VERDICT

(Filed February 22, 1980)

Having overruled defendant’s post-trial motion, the

Court concludes that the total damages awarded by jury

in the amount of $223,319 should be trebled in accordance

with 15 U.S.C. 15 so that the plaintiff shall have a judg-

ment against the defendant in the amount of $669,957.

In support of the application for attorneys’ fees, the

present attorney for the plaintiff, Bruce D. Brooke, has

filed affidavits from five attorneys who have worked on

the case, including himself, which reflect a total number of

971.1 hours devoted to the case. It should be noted that

this does not include the time devoted to responding to the

defendant’s post-trial motions. Three of these affidavits

also state the reasonable amount of the total fee to be

$110,000, $110,000, and $150,000. There are also four addi-

tional affidavits from members of the Memphis and Shelby

County Tennessee Bar who have found reasonable value

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of the total services rendered to be $135,000, $125,000,

$120,000, and $116,000 respectively. These are based upon

in excess of 925 hours.

This Court is of the opinion that a reasonable fee for

services covered by the affidavits is $125,000. This takes

into account the fact that the time of two associates,

Stambaugh and Minor, wouid not command as large a fee.

However, the time spent in this case includes substan-

tial duplication due to a change of lead attorneys approxi-

mately 11 months before trial. This case was primarily

handled after it was filed by Phillip Brooke. His affidavit

reflects that he has devoted 444.1 hours to this case. In

mid-1978, due to his health, he requested that he be

relieved from further representation. Thereafter his brother

Bruce D. Brooke became the primary attorney for the

plaintiff. He devoted 340 hours to the case exclusive of the

response to the post-trial motion of the defendant. Un-

doubtedly Bruce Brooke had to duplicate some of the

services which his brother had performed. The Court of

Appeals for the Sixth Circuit has approved the arbitrary

method of deducting for duplication 0 applying a percent-

age to the total.* In this case the percentage factor should

be 15%, which amounts to $10,750, thereby resulting in a

total fee to be awarded of $106,250.

While the costs are allowable against the defendant,

no bill of costs nor schedule of expenses has been filed.

Therefore, the Court cannot rule upon that at this time.

*Northeross v. Board of Education, Memphis City Schools, _._. F.2d

—— (C.A, 6th, 11-23-79).

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In summary, it is hereby ORDERED that the Clerk will

enter a judgment for the plaintiff in the amount of $669,957

and an award of attorneys’ fees as part of the costs in the

amount of $106,250.

ENTER: This 21st day of February 1980.

/s/ Robert M. McRae, Jr., Judge

United States District Court

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APPENDIX “3”

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

J. WYATT SKAINES, d/b/a

WYATT TIRE DISTRIBUTORS ............... Plaintiff

vs. No. C-72-216

UNIROYAL, INC., formerly

UNITED STATES RUBBER CO. .............. Defendant

RULING ON DEFENDANT'S MOTION FOR JUDGMENT

N.O.V. OR A NEW TRIAL OR REMITTITUR

(Filed February 22, 1980)

This ruling pertains to the post-trial motions in this

antitrust case brought pursuant to the Robinson-Patman

Act wherein the jury rendered verdicts in favor of the

plaintiff in the total amount of $223,319. Plaintiff seeks to

have that sum trebled, and the defendant by its post-trial

motion seeks to have a judgment notwithstanding the

verdict, a new trial, or a remittitur.

Grounds I, II, and III attack the amount and weight of

the evidence, with Ground III being based upon a charge

of a verdict so excessive as to indicate prejudice on behalf

of the jury. This Court concludes there is evidence to sup-

port the jury’s findings. In fact the jury’s verdict was

substantially less than the amount contended for by the

plaintiff.

Ground IV of defendant’s motion is based upon a con-

tention that the Court erred in not granting a mistrial

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because the plaintiff “radically changed” his characteriza-

tion of his alleged damages and the amount and basis of

calculating the same. This contention by the defendant is

completely contrary to the record in this cause. The

defendant could have been aware of the plaintiff's proposed

method of calculating damages as early as December 1,

1978. The defendant obtained a continuance of this matter

in January 1979, allegedly for the purpose of carrying out

discovery of the plaintiff's theories of damages. The defen-

dant took no steps to determine the method of the plaintiff's

calculation. Plaintiff's calculation was based upon the

figures generated from the defendant's own records that

reflected a substantial difference in prices given to the

favored United Tire Company as against the prices ex-

tended to the plaintiff. The objection which the defendant

raised at the time of the trial of the cause was that it would

not have an opportunity to cross-examine the plaintiff

about this calculation. In response to the defendant's

request, the Court was willing to reopen the proof. The

defendant further had its methods and systems analyst,

Jack Hance, continuously available for assistance to attempt

to develop any alleged rebuttal proof.

The defendant further claims as error Number V on

the part of the Court, allowing the plaintiff to reopen his

proof regarding price differentials. The Court’s direction

to the plaintiff to reopen the proof was as a result of the

defendant’s claim that the trier of fact would not be able

to properly discern the evidence that had already been

introduced. In the Court’s discretionary authority to obtain

justice and fairness in the trial, it directed that the plaintiff

reopen its proof to cut down on the amount of the claim

for price discrimination to the period wherein the alleged

favored customer was in competition with the plaintiff.

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Grounds VI through X allege errors of omission end

commission on the part of the Court in the matter of the

Court’s instructions to the jury with regard to the trouble-

some principle of like grade and quality. At the trial and

prior to the jury instructions considerable discussion and

argument was devoted to the topic of like grade and

quality. In addition to the problems common to most pro-

ducts, the automobile tire industry has its own pecularities

such as the industry practice of selling “blemished” tires

for reduced prices and the practice by the manufacturer of

designating some regular tires as blemished in order to sell

them quicker or to give a particular customer a favored

position.

There was an additional problem peculiar to the proof

in this case concerning truck tires. In some measure due to

the defendant’s tardiness in furnishing information, plain-

tiff’s expert was not able to make some pretrial comparisons

for the matter of truck tires. However, in the opinion of

this Court, that went to the weight of the expert's testimony.

This Court is of the opinion that it instructed the jury

in accordance with the applicable law in the light of the

issues presented by the proofs offered.

Grounds XI, XII, and XIII allege errors of the Court

with regard to the Court’s rulings and jury instructions in

the matter of how the amount originally claimed by plain-

tiff as compensation for his services was eliminated from

the claimed amount of future lost profits and the corollary

item of plaintiff's earnings in another field after his tire

business was closed.

This Court required the plaintiff to remove from his

claimed annual lost profits the sum of $9,000 which had

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been inserted in projections prepared or approved by

defendant personnel as appropriate compensation for the

services to be rendered by the plaintiff to the tire dealer-

ship. This reduced the claimed net profit and hence the

projected loss of future profits. This was the Court's

attempt to have the jury determine the lost profits exclu-

sive of the value of plaintiff's personal efforts because he

had moved into another means of earning a living.

As Ground XIV, defendant contends that the Court

erred in failing to instruct the jury that any verdict it might

award would be trebled. The defendant argued this very

same position during the time of trial and the Court ruled

that there is no affirmative responsibility to mention

trebling to the jury.

Ground XV charges that the Court erred as a matter

of law because it allowed the jury to speculate as to the

amount of plaintiff's damages in all the categories submit-

ted to them: (1) lost profits on sales diverted from plaintiff;

(2) differentials in prices the defendant charged United

Tire and Rubber Co. versus the prices charged plaintiff;

(3) plaintiff's lost future profits. This contention of the

defendant is the same as there being a lack of evidence to

support any verdict which awards damages.

(1) The jury found, pursuant to the interrogatory

submitted, that the loss of profits on sales to customers

during the period covered by the lawsuit were, in fact,

proximately caused by the illegal price discrimination of

the defendant. The plaintiff offered testimony that his

basis for a high sales volume in September 1969 was the

result of his willingness to lower his prices in order to

compete with the prices extended by the defendant to its

favored customer, United Tire Company. The jury’s award |

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for this item was substantially below the proof relied upon

by the plaintiff for this category of damages.

(2) In support of its attack on the damages based

upon price differentials between the prices charged plain-

tiff and United Tire, the defendant has filed an affidavit of

a paralegal, Victoria S. Baird, that purports to show that

some of plaintiff's proof in this regard was inaccurate. This

attack pertains to the proof that was offered when plaintiff

was allowed to reopen the proof in order to present proof

of a lesser amount of damages in the light of the Court's

ruling on some of the proof.

Upon reopening of the proof, plaintiff testified that

between July 25 and October 1969 he purchased 2,579 tires

for $41,527.15, an average of $16.10 per tire; that United

Tire and Rubber Co. purchased 5,645 tires for $53,751, an

average of $9.52 per tire; and that plaintiff was claiming as

damages the difference between the aforementioned aver-

age prices, $6.58 per tire, times 2,579 tires, or a total of

$16,969. The jury awarded this amount as price differential

damages.

In some respects the argument made from Mrs. Baird's

affidavit is inaccurate and irrelevant. Otherwise, the in-

ferences presently asserted are arguments which should

have been presented to the jury.

(3) This attack is open upon the $205,000 portion of

the verdict, which the jury found to be based upon loss of

future profits. The attorney for the defendant argues that

this award is speculative and excessive in that it is based

upon a business that closed after 21 months, during which

period there was never an annual profit. While this Court

agrees that this is a substantial verdict, the Court believes

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that the antitrust law provides that the loss of future

profits is an allowable element of damages.

Initially, the plaintiff claimed $561,400 in damages for

loss of his profits from the expected operation of the busi-

ness for 25 years. This was based upon a projection of

estimated expenses, sales, and profits prepared by

knowledgeable officials of the defendant company and the

plaintiff who had ten years of employment with defendant

and other tire companies. This projection was made prior

to the commencement of the operation of the violated

dealership. The projection included $9,000 per year for the

plaintiff, who was projected to be the owner-manager.

Because the plaintiff has established himself in another

type occupation the Court ruled that $9,000 per year should

be removed from this part of plaintiff's damage claim.

After that claim was removed, the plaintiff's remaining

total claim for loss of future profits was $336,000. Therefore

the $205,000 represents a further downward adjustment of

the claim by the jury, which could have been based upon

a number of different items such as some of the plaintiff's

actual financial data, including profits for some months,

or the value of money received now for loss of profits in

the future.

This Court finds no basis for setting aside nor reducing

this verdict.

Grounds XVI, XVII, XVIII, and XIX are also based

upon claimed errors in the portion of the judgment based

upon the damages awarded by the jury for the loss of

fuiare profits. These are, respectively, claims by the defen-

dant of no showing of actual damages, the verdict is dupli-

cative with damages for losses on diverted sales, the verdict

was upon mathematically erroneous calculations and the

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jury awarded too much money for the loss of future profits

for a business that operated this short length of time and

that had as little capital as the plaintiff's tire business had.

As the Court heretofore indicated, the antitrust law

recognizes loss of future profits as an element of damages.

In this case there was exceptionally strong evidence of a

violation of the Robinson-Patman Act, albeit of short dura-

tion. The case was a difficult one for the plaintiff to prove,

due to defendant’s inability to furnish adequate records.

This Court believes that the matter was submitted to the

jury in accordance with the law in the light of the evidence

offered.

IT IS THEREFORE ORDERED that the motion of the

defendant for a judgment notwithstanding the verdict or a

new trial or a remittitur is hereby overruled.

ENTER: This 21st day of February 1980.

/s/ Robert M. McRae, Jr., Judge

United States District Court